One of the male guests at Aunt Maud's party goes to the piano and plays while the whole crowd sings. Merton and Kate go to sit together on a small sofa.
Kate tells Merton that Milly must be very ill if she's missed this party. Merton wants to know what's the matter with her, but Kate ignores him and goes on to say that he might be the reason she hasn't come. She then concludes that Milly hasn't come because she likes Merton too much and feels overwhelmed. Then Kate goes back to talking about how Milly is ill and wonders why the girl wouldn't go home to America if that were the case.
It turns out that according to Kate, Milly and Susan had planned to leave London until the day Milly saw Merton in the Gallery. Since then, she seems to have changed her mind about staying. Kate comes out and says this is probably because she wants to stick around for Merton.
For the first time, Kate mentions just how massive Milly's fortune is. And with that, we can see another piece of the puzzle falling into the "plan" she's been talking about.
Kate talks about how Milly has the power to make a very great (i.e. very rich) marriage. Hint, hint, Merton…
And in case we hadn't gotten the point, Kate says that if Milly is terminally ill (and she's pretty sure the girl is), she wants Merton to comfort her in her waning days. In other words, she wants Merton to return the girl's romantic affection.
At this moment, Lord Mark barges in on their conversation. Kate introduces him to Merton for the first time.
Lord Mark knows that Susan Stringham is around, and so he asks whether Milly is too. He is disappointed, though, to find out that Milly isn't around. He then inquires whether the girl is ill.
Lord Mark leads Kate away to speak privately with her. When Kate comes back, she confirms Merton's suspicion that Lord Mark is the man Aunt Maud wants Kate to marry.
Merton asks how Aunt Maud deals with the fact that Lord Mark is obviously interested in Milly instead of Kate? Kate says that Aunt Maud probably takes comfort in the fact that Milly doesn't seem interested in Lord Mark. She hearts Merton.
As if on cue, Merton takes another opportunity to profess his love for Kate. Kate says that things will be fine if they stick to their plan. Milly is going to go traveling, but Kate plans on finding a way to put Merton in her company.
When some people come near them again, Kate tells Merton that he needs to get away from her. Now more than ever, they must look like there's nothing romantic between them.
Merton senses that Susan Stringham is looking at him gravely as she bids him good night. He knows that she is going to report back to Milly on everything he has said and done.
Aunt Maud comes up to Merton and tells him he should go see Milly. She's obviously been talking to Susan about him. Merton says that Milly's leaving soon, but Maud insists that the girl won't go until she's seen Merton. Further, Maud promises him that they'll go travelling wherever Milly and Susan do. It's clear that she's trying to set him up with Milly just as hard as Kate is.
At this moment, Merton realizes that Aunt Maud is trying to get him away from Kate by buying him off with a marriage to Milly—that is, to Milly's massive fortune.
On top of that, Aunt Maud informs Merton that she has lied for him in order to smooth his way with Milly. She has guaranteed Susan Stringham that Kate has no interest in Merton at all and that nothing can happen between them. The fact that Maud knows this is a lie suggests she knows about Kate and Merton's relationship. Now she wants Merton to make the lie come true.